surface transminutes 9-10-09-1

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MinutesRail Energy Transportation Advisory Committee

September 10, 2009

Rail Energy Transportation Advisory Committee (RETAC) convened at the Surface

Transportation Board (STB) offices in Washington, D.C., on Thursday, September 10,2009. Alan Shaw, co-chair, called the meeting to order at 9:00 a.m. The meeting agendaand copies of referenced documents presented during the meeting are attached separatelyto these minutes.

Attendance:

Surface Transportation Board:

Daniel R. Elliott III, ChairmanFrancis P. Mulvey, CommissionerCharles D. Nottingham, Vice Chairman

Scott Zimmerman, Designated Federal OfficialRaymond A. Atkins, Chief of Staff

RETAC Members:

Alan Shaw, Co-chairman

Betsy Monseu William Berg Mark Huston Daryl HaackSusan Arigoni Stevan Bobb Bruce Blanton Kent SmithDan Kuehn Sameer Gaur John Hull James StemHenry Rupert Darin Selby Darrell Wallace Anthony ReckEd McKechnie Dan Sabin Robert Hulick John Gray

STB Vice Chairman Nottingham and Commissioner Mulvey welcomed the committeeand new members, John Gray representing Hawkeye Gold and Anthony Reckrepresenting Four Rivers Transportation. Vice Chairman Nottingham also introducedChairman Elliott. Former members David Rohal and James Redding were recognized fortheir contributions.

Minutes of the June 11, 2009, meeting of the RETAC Committee were approved.

Co-chairman Shaw reported that the committee fund totaled $2175. Member terms werediscussed, highlighting that current members were assigned to 1, 2 or 3 year terms andnew members to 3 year terms.

Scott Zimmerman advised that an updated contact list will be distributed.

Co-chairman Shaw reminded members to select subcommittees to assist in furthering theactivities of the committee.

Co-chairman Shaw then conducted the election of new officers as follows:


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Co-chairman (Shippers) - William BergCo-chairman (Railroads) - Stevan BobbSecretary/Treasurer - Robert Hulick

STB representatives expressed their thanks to Messrs Shaw, Wallace and Rohal for theirservice as officers of RETAC.

Coal Dust Mitigation Presentation Stevan Bobb, BNSFAttached presentation was made by member Bobb defining the issue of coal dustmitigation, what is being done by BNSF and measures of success. Use of dust collectors,trackside monitors, establishment of thresholds and train monitoring have beenemployed.

Comments following the presentation:

Member Reck How does loss at bottom of car compare to top? - Typical 400 mile trip =45pound bottom, 600 pound top.

Member Huston How far from mine does loss continue? Unpredictable.

Commissioner Mulvey How is fugitive coal dust handled when removed from ballast?

Believed to be benign, transported to landfill.

Member Berg Has consideration been given to vacuuming of track? Focus is onavoiding emission.

Member Kuehn This has been a controversial contentious issue when dealing with costallocation and possible tariffs associated with dusting of trains.Appreciative of sharing of data.

Vice Chairman Nottingham How great is customer concern related to loss of paid-forCommodity? Certainly a concern, several alternatives toimprove under consideration: Body Spray, Topper Spray,Covers, Vibrater, etc. It is a competitiveness andenvironmental issue.

Subcommittee Updates:

1) Capacity Planning Henry Rupert reviewed attached report. It was noted thatwith 30% of the coal fleets idle, capacity issues are not as prevalent. Thesubcommittee has asked the Board to respond to white paper to provide guidanceregarding path forward. It was noted that capacity planning relates to the entiresystem, Producers, Transport and Consumption. The subcommittee alsorequested proposed topics for study in 2010.


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Co-chairman Shaw Noted investment is based on earnings / risk. Currentnetwork may be over capitalized 10-20%. Cap and Trade

potential and PTC investments are of concern.

Member Hull Improved train speeds have been a benefit. Has considerationbeen given to the impact on train speeds when business returns?- CSXT, spikes difficult to predict and manage vs. trends orshifts.

- BNSF coal velocity improvements due to both capacityinvestments and process changes, not only business levels.

2) Performance Measures Betsy Monseu reviewed attached report. Subcommittee

requested input on coal dashboard, noted that additional ethanol information willbe added and subcommittee plans to prepare a white paper.


Co-chairman Shaw Forecast shows little reduction in inventories in 2010.

Member Gaur Days inventory appears greater than 80 days.

Commissioner Mulvey ETA is expecting increases in natural gas prices.

Member Arigoni, Kuehn, Berg Inventory reduction would lead to reductionsin supply requirements.

Member Darrell Wallace reviewed ethanol and DDG demand trends, productionand impact of blending limits and California low carbon fuel standards includedin the attached report.

3) Best Practices Susan Arigoni reported the first draft of the subcommittee whitepaper will be prepared for discussion at next meeting. Additional focus onforecasting to be implemented.

4) Communications Edward McKechnie reported that the work of thissubcommittee will be defined by agreed upon RETAC guidelines for distributionof information beyond the STB.

Roundtable Discussion:

Members Sabin and Arigoni lead a discussion of the topics submitted. A list of topics isattached. Initial comments focused on the perceived benefit of STB discussions with


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other Governmental Departments regarding transportation planning to reduce riskaversion created by uncertainty.

Comments supported an ongoing role for coal in the energy market albeit reduced andwith limited growth due to increased use of alternatives. It was suggested that RETAC

schedule a presentation of the Electric Power Research Institute (EPRI) Prism andMERGE analyses for a future meeting.

It was expressed that the clarity of the future is impaired by the lack of a National EnergyPolicy and a National Transportation Policy. It was also suggested that ongoing Houseand Senate updates, similar to those presented at the June 11 meeting would be a benefit.Issues to monitor included coal gasification technology, carbon sequesteration, cap andtrade and transmission systems for captured CO2.

Discussion topics will be reviewed by the Co-chairmen for possible assignment to thesubcommittees for additional review.

Next Meeting Date

December 1, 2009, 9 a.m., location to be determined (may be hosted by FERC).

surface transminutes 9-10-09-1

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